The EU's current test protocol is known to produce results that don't hold up in the real world, but the real push to change it came from Volkswagen's use of "defeat device" software on its diesel cars.

In Europe, VW currently offers a 1.0-liter 3-cylinder engine in the Golf, as well as the smaller Up and Polo.

Diess said the automaker has no plans for a gasoline engine smaller than 1.0 liters, or for a diesel engine smaller than its current 1.6-liter 4-cylinder unit.

The next-generation Polo that will launch later this year will have a diesel option, he said—but its successor in the 2020s might not.

Lawsuits and criminal charges against Volkswagen over its diesel emission scandal are winding to a close in the U.S., but cases and investigations remain open in multiple European countries, South Korea, and elsewhere.

VW Group has pledged to have 30 different battery-electric vehicles on sale across its large portfolio of brands by 2025.